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The TPP Hands Control Over Trade To The World's Wealthiest

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If there is someone who knows about plutocrats, it is Chrystia Freeland, Canada’s international trade minister responsible for deciding what to do about the TPP, the foremost international agreement among plutocrats. She has been to the parties and observed the richest one per cent in their natural setting, with their superstar interior designers, cooks and fashion designers.

As a financial journalist, she wrote a book, Plutocrats: the Rise of the New Global Super-Rich and the Fall of Everyone Else. In it, she recognizes the losses that have occurred under globalization.

She writes, “The distributional impact is, in the terms of art used by economists, to polarize the labour market: there are better and more highly paid jobs at the top, not much change for the low-skill, low-income jobs at the bottom, but a hollowing out of the jobs in the middle, which used to provide the paycheques for the American middle class.” She interviews Nobel economics laureate Joseph Stiglitz, who opposes the TPP and echoes his arguments about free trade’s dangers to the average worker.

She echoes his concerns about the rules being set in the interests of the super-rich. “Trying to slant the rules of the game in your favour isn’t an aberration, it’s what all businesses seek to do. It is all about whether your society has the right rules and policing able to enforce them.”

But her statements as a minister have been confusing. Now, she is saying that free trade is the key to middle-class prosperity and that opposing trade agreements is wrong-headed.

Perplexed, I asked her about this during a visit she made to the Université de Montréal. The TPP sounds like the type of plutocratic agreement she would oppose: carved out in secret between the corporations of the world. In the U.S., more than 600 corporate lobbyists had access to the text during the negotiations, for example, while the U.S. Congress and Canadian Parliament did not. Advocacy group Open Media obtained a non-disclosure agreement for a group of people consulted in secret by the Canadian government on the TPP. Environmental groups were not consulted, nor were labour unions or citizens’ groups. In fact, those who did have access to the agreement could be arrested for revealing the information.

As Stiglitz says about the TPP, “Obama has sought to perpetuate business as usual, whereby the rules governing global trade and investment are written by U.S. corporations for U.S. corporations. This should be unacceptable to anyone committed to democratic principles.”

Like Obama, Freeland claims to be concerned about income inequality but then advocates for the very instruments that will exacerbate the problem.

"When we look at the rest of the deal, we again see the public policy spaces of nations getting smaller and smaller, while the right to make profits gets bigger and bigger."

Let’s look at the TPP itself.

For starters, it has one glaring problem: ISDS, the investor-state dispute settlement provision that allows corporations to sue states over decisions that affect their future profits. This steel-trapped protection can also be found in NAFTA, the Comprehensive Economic and Trade Agreement (CETA), and 3,200 other agreements around the world. In a nutshell, by holding governments responsible for corporate risk, it makes taxpayers assume the financial burden that companies normally assume as part of being “entrepreneurs.”

Maude Barlow, chair of the Council of Canadians, has written about how ISDS kills environmental and social policy by forcing mammoth penalties on any country that attempts to ban fracking, or close a quarry, or regulate drugs, or that refuses to agree with a company on a patent, or that tries to establish an economic development program. Or that even raises the minimum wage.

The irony is that trade agreements lock in these rights for companies at the international level and can be binding because they are enforced. Very few other treaties benefit from such enforcement, whether the Paris climate agreement or international standards on labour, health or human trafficking. None of these are binding or enforceable.

ISDS has been the weapon of choice of plutocrats. A new study by Gus Van Harten, a scholar at the Osgoode Hall Law School in Toronto, found that ISDS was used by very large corporations and very wealthy individuals. Remember, these rights are for large foreign companies, not domestic companies, and certainly not for small or medium businesses or for ordinary citizens or civil society.

ISDS is also used to silence governments. Another study by Van Harten says that it doesn’t even take an ISDS challenge or the threat of an ISDS challenge to change policy. In interviews he held with Ontario policymakers, they reported that policy decisions would get delayed or shelved because of potential lawsuits. One lawyer reports that legislation is reviewed to see if it compatible with trade agreements, saying that “Chapter 11 [the ISDS clause in NAFTA] is the one that really bites.”

At the national level, we are seeing state sovereignty diminished. As ISDS challenges the ability of states to regulate, national standards and rules are harmonized downward in free trade treaties. This means we regulate for corporations at the international level and deregulate for the public interest at the national level. 

When we look at the rest of the deal, we again see the public policy spaces of nations getting smaller and smaller, while the right to make profits gets bigger and bigger.

Other ways our public space is getting smaller:

  • Higher drug costs: This trade deal adds them by extending pharmaceutical patents on new life-saving drugs. This has the double whammy effect of raising profits for pharmaceutical companies while making public health care less affordable for governments. Ironically, while free traders say they are eliminating protections to allow trade to be free, patents are protectionist measures granting monopolies to companies.
  • Straight-jacketing of Crown Corporations: The TPP imposes restrictions on state-owned enterprises. Governments are not allowed to be “discriminatory” in their treatment of Canada Post or Ontario’s Hydro One. For example, no preferential loans, no marketing services, nothing that can give “an advantage” over a foreign company. In the past, state-owned enterprises have been used to implement energy strategy or fulfil public policy goals. No longer.
  • Canada relinquishes control of its economy: Countries use macroeconomic instruments to influence their economy and public policy. In trade agreements and in TPP, these can be construed as barriers to trade. For example, Canada would have to cede a large part of its foreign investment screening regulations. These rules prevent domestic companies in strategic areas from being sold recklessly to foreign companies. The TPP will also open up the labour market to more temporary foreign workers serving with corporations from TPP countries.
  • Local jobs at risk: Free trade agreements often attack buy-local programs. And the TPP is no different. Foreign companies have to have the same rights to public contracts. Often, this does not help create local jobs.
  • More BGH milk on its way: Unlike the U.S., Canada prohibits the use of bovine growth hormones in milk production. Brent Patterson of the Council of Canadians warns that, with the TPP allowing more U.S. milk to cross the border, more milk will come in with BGH. In the TPP, a side letter mentions the need to conduct an assessment of equivalency between U.S. and Canadian regulations on in Grade A milk.
  • Local food security threatened: In agriculture, our ability to protect our own food security by producing milk, poultry and eggs in Canada is being compromised by pressures on the supply management system. Free trade is eroding small-scale, lower-pesticide domestic production in favour of large-scale industrial global farming with serious consequences on human health and the environment.
  • The downward slide in wages: There are no real safeguards for labour rights. In the TPP, countries have to have labour legislation, but this legislation can be sub-standard. Canadian workers will be directly in competition with workers in countries with minimal labour standards, like Malaysia, which has a reputation for human trafficking.
  • More rights for polluters, more attacks on green energy: In environmental matters, ISDS cases are often brought forward by resource-extracting companies in the energy and mining sectors. Renewable energy programs have been targeted by ISDS challenges. The TPP will exclude us from managing or controlling our own resources, or even distinguishing between different energy forms. Climate change is not even mentioned in the TPP, according to the Sierra Club.

We know that the world’s top one per cent own more than 50 per cent of the world’s wealth. The ability to make policy and to enforce it at the national level is essential to combat the slide towards plutocracy, under which society is controlled by the wealthiest citizens. Mr. Obama and Ms. Freeland, please listen to your own rhetoric. Pull the plug on the TPP and CETA.

Read part one of this blog post here.

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